A decrease in demand with the supply held constant leads to:
a. an increased equilibrium price and an increased equilibrium quantity.
b. a decreased equilibrium price and a decreased equilibrium quantity.
c. a decreased equilibrium price and an increased equilibrium quantity.
d. an increased equilibrium price and a decreased equilibrium quantity.
QUESTION 2Suppose that the average equilibrium monthly rental price of apartments and rooms in a college town had been steady at 600, but then the college expanded enrollment from 10,000 to 12,000 . Suddenly there is a shortage of rental housing at the prevailing price of 600 . Which of the following is most likely to be true?
a. The shortage occurred because demand increased, and a new market equilibrium will result in higher rental prices and more rental units available on the market.
b. The shortage occurred because supply increased, and a new market equilibrium will result in lower rental prices and fewer rental units available on the market.
c. The shortage occurred because demand decreased, and a new market equilibrium will result in lower rental prices and fewer rental units available on the market.
d. The shortage occurred because demand increased, and a new market equilibrium will result in higher rental prices and fewer rental units available on the market.
QUESTION 3At the equilibrium price, deadweight loss is minimized.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4Deadweight loss results from too few or too many resources used in a given market.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5The deadweight loss equals the consumer surplus minus the producer surplus resulting from a non-equilibrium price.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Deadweight loss results from a misallocation of resources.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7Total producer surplus is the area below the equilibrium price and above the supply curve.
a. True
b. False
Indicate whether the statement is true or false
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